Tag Archives: Forrester

Empathy Transforms Health Insurance

Forrester’s “The U.S. Health Insurers Customer Experience Index, 2018” found that the consumer experience with health insurance companies is among the lowest-ranked in the industry. The cause, according to Forrester: Insurers don’t engage with emotion.

Making an empathetic, emotional connection with consumers should be a top priority for health plans that want to differentiate themselves from competitors in an increasingly crowded market.

Why Customer Experience Is Essential — and Difficult

A positive customer experience can set a health insurance organization apart from others. With more choices available than ever, members are ready to switch health plans if they feel you’re not meeting expectations. Not only that, they’ll share stories with each other, and these stories and reviews matter more than you think.

I saw this play out with my company’s recent open enrollment process. My colleagues and I were deciding which insurance company we would choose. A couple of employees mentioned how difficult it was to work with one of the companies on the docket, while another woman said that one option was more collaborative and seemed like it cared about her health. She said she wouldn’t mind paying more for a trustworthy company, and, just like that, eight of us were swayed to go with the more expensive option because of the experience it delivers.

To be fair, the industry faces significant hurdles in its quest to improve customer experience. Health is a personal and sensitive area, so healthcare is an emotional field. When dealing with intimate, frightening medical issues, it’s easy for consumers to transfer their fears and frustrations to something as complicated as insurance. And it doesn’t help that consumers often don’t know exactly what they’ve bought until they need to use it, which sometimes causes unpleasant surprises.

See also: Thought Experiment on Life Insurance  

Communication between members and health plan representatives is another barrier to connection. Because many member-payer interactions happen over the phone or via email, it’s difficult for health plan representatives to empathize with consumers. Add to that the high turnover rate within this field. A lack of trained, experienced staff makes it difficult to build trust and long-term relationships with consumers.

A Simple, Human Approach to Customer Experience

Despite these challenges, focusing on the human element of health insurance will improve the consumer experience — if you make empathy and top-notch communication the driving forces.

Getting in front of new members is crucial. Because they probably don’t have a full understanding of what they’ve bought until they need it, you have an opportunity to give them more information and build trust. Consider it a preemptive strike: As soon as they sign on as members, welcome them with communications that outline just what they’re getting from you, and explain how they can best communicate with your organization. When questions arise down the line, they’ll feel prepared instead of frustrated.

Using plain language is crucial because the industry’s jargon confuses many. In a Policygenius survey of more than 2,000 Americans, plenty of health insurance consumers were confident they understood basic health insurance terms like co-pay, deductible, out-of-pocket maximum and co-insurance. But when asked to provide definitions, far fewer respondents — 4%, to be exact — could correctly define those terms. Being able to communicate insurance terminology so the everyday consumer can understand will be essential to forming member relationships and offering an excellent experience.

Empathy is equally important. Again, health insurance is an inherently emotional field, and you have the opportunity to interact with members with the kind of sensitivity, empathy and emotional intelligence they crave. 60% of consumers will cut ties with a company if they feel staff members are apathetic. From copywriters to customer service team members on the front lines, train people on how to empathize with others and how to communicate with empathy. This isn’t a skill that can be taken for granted.

See also: 4 Trends to Expect in Health Insurance  

Finally, don’t forget about your own employees. If you take care of them as you would your members, you’ll empower them to provide the best possible service and experiences. Research shows that recognition is employees’ No. 1 desire, and it can inspire them to do their best work. Everyday affirmations and formal acknowledgment that they’re doing great work can help encourage employees to maintain the highest standards when it comes to customer service.

Customers need to trust their health plans if they’re to build an enduring relationship that lasts through a turbulent, competitive market. That trust is best established through authentic human connection. A focus on clear, empathetic communication and emotional intelligence can be transformative, giving even the most frightened, confused member a feeling of comfort and support.

3 Ways to an Easier Digital Transformation

Across industries, digital transformation and cloud migration are forces to be reckoned with. Insurance is no exception.

As an industry accustomed to operating on legacy technology, insurers should approach the cloud migration process judiciously. But they should also know that moving all workloads to the cloud – even if incrementally – is necessary to keep up with evolving customer expectations.

The industry at large is receiving this message. Nearly 70% of insurers report they are somewhere along the journey to digitally transform their infrastructure, according to a report from Ensono and Forrester.

But the jump from mainframe to cloud shouldn’t take place overnight. By taking a methodical approach and prioritizing the right workloads, insurance technology teams can achieve a hybrid IT infrastructure that allows for improved operations at manageable costs. Here are three guidelines to follow as your insurance organization adopts a hybrid cloud strategy:

Prioritize which applications to move first

46% of insurers surveyed in the Ensono/Forrester study cited improving application performance as the most important IT change their company could make to augment customer engagement. But according to IBM, nine out of 10 of the world’s largest insurance companies still run on mainframes. Leaning on legacy technology alone makes it challenging to keep pace with application upgrades and customer expectations for speed and experience. Organizations that remain within a stand-alone legacy environment will have to rely on workarounds to keep upgrading their app performance, and these workarounds will only become more frequent and costly.

See also: Digital Transformation: How the CEO Thinks

However, moving all operations to the cloud and scaling up overnight isn’t a realistic ask of traditional insurers, either. The transition is expensive and takes months of planning and testing. Instead, insurance organizations should take things slower by prioritizing the applications that require the highest levels of performance as well as most external and third-party connectivity. The basic rule of thumb: Apps that are customer-facing should be at the top of your list.

Set yourself up with premium analytics

Quality data is central to understanding the needs of agents and customers, but legacy technology doesn’t allow for the best insights. Turning to a cloud or hybrid strategy increases an insurer’s ability to access top-notch, real-time data and analytics, as well as expand into emerging cloud offerings.

According to Ensono and Forrester, almost half of insurance decision makers use cloud platforms for advanced data analytics, and about 40% believe it’s important to expand their use of emerging cloud technologies like mobile or internet of things (IoT) and increase reliance on public cloud platforms for systems of engagement. Those systems of engagement need to connect seamless to systems of record.

Find the right partners

Data analytics clearly play a huge role in the benefits insurers can reap from a hybrid cloud strategy. But a full 100% of insurers admitted to facing data-related security issues, according to Ensono’s study. Whether this is due to outdated IT infrastructure or a lack of expertise, it’s unacceptable to put any data at risk, especially customer data.

The right partners can help keep your organization’s data secure while optimizing the right applications for cloud. Mainframes – a true foundation of the insurance business – aren’t going away in this process, but they won’t bear the whole burden any more, either. Legacy systems do have their perks, such as security and expense, but ultimately insurers need to ensure they have access to the expertise needed to help their businesses thrive in the cloud.

See also: 4 Rules for Digital Transformation

The transition to a hybrid IT environment requires re-engineered IT infrastructure, the use of real-time data and insights and the right talent – the kind that can create a flexible and competent IT strategy with a custom balance of legacy platforms and cloud environment. Partners like managed service providers (MSPs), migration services and consultants can make the process much smoother. Accessing third-party support also allows your organization to skip the stressful experience of hiring for internal tech experts in a talent economy suffering from an IT skills gap.

The push from customers for faster, better service in insurance continues. But dated infrastructure and an IT talent shortage is holding the insurance industry back. Digital transformation is the only way to achieve growing expectations, cloud migration being the core driver behind the progress. Insurers must thoughtfully design an infrastructure migration plan associated with their application strategy and seek the needed resources to help carry it out, thus ensuring a stabler as well as growing customer-backed future.

What Is Your 2016 Playbook for Growth?

CEOs entering 2016 convinced they can succeed by doubling down on what worked in the past may be reading from the wrong playbook.

According to a recently released Forrester/Odgers Berndtson study, “The State of Digital Business 2015,” most companies remain unprepared for digital transformation” — an absolute must for growth. Yet executives representing the diverse sectors examined in the study expect the majority of their sales to be digital by 2020. How will they get there?

If your transformation plan to capture at least a fair share of an expanding digital sales pie is not well underway, and you feel behind the eight ball, that may be for good reason – digital transformation leading to adopting a meaningful new business model or new technology can take years. And it demands operating along a different set of practices that used to work.

Growth is within reach of any CEO…

  • Moving at least as fast as the pace of technological change,
  • Delivering on clients’ growing expectations for real outcomes, and
  • Adapting to the shifts of economic and workplace controls to the millennial generation.

The CEO must be the Chief Growth Officer. Hiring a chief digital officer or chief innovation officer or someone else carrying a fashionable CXO title assigns daily responsibility for actions to close the digital gap. This can be a good move. The CEO cannot be everyplace at all times, and, besides, micromanagement from the top of the C-suite is deadly. When it works, this added role introduces skills, fosters enterprise-wide external partnerships, signals commitment inside and outside the organization and creates the digital blueprint for buy-in by colleagues. But the CEO alone has and must use his or her authority to coordinate growth levers and make the tough calls.

The CEO is also the Chief Culture Officer. Culture is not the job of HR or any other designee. Culture is the sum of the hundreds of choices everyone makes every day. People respond to the behaviors of their leaders. What do growth behaviors look like? Think about orchids in a greenhouse. Like orchids, new and different ideas are fragile and require special care. They may need protection from the outdoors – the conditions through which a mature business can operate, but that will kill a still-emerging concept. The CEO must advance a culture of a greenhouse, using governance to support both the work wherever growth businesses are being incubated, and a smooth transfer to the mainstream at the right time.

A lot has changed, but strategy is still the starting point for execution that gets results. Good strategy means having a clear view of where you are, an intended destination and a map of the terrain with a logical path to get there. Good strategy allows for good prioritization of short- and long-term moves, including the digital agenda. Strategy is still what gives all members of an organization a common view of goals. Strategy must evolve from what it has become in too many companies — a financial extrapolation supported by a sales-y PowerPoint presentation and ungrounded assumptions.

You must govern to engage and create accountability. Bring the whole C-suite into the act – no bystanders or anonymous choristers allowed. It’s a great idea to ask your CMO or CIO (or both) to lead the digital acceleration effort, but what about the rest of the C-suite? Put a governance process in place that fosters a constructive dialog with all of the CEO’s direct reports, including the P&L leaders and functional heads. Governance must reinforce that every member of this team has “skin in the game” to achieve growth results. No one is exempt from being part of the solution.

You have to update the risk/reward equation. Face it – the traditional American corporation was built to be predictable – to control risk. But nowadays, avoiding deviation from the status quo may be the riskiest path of all. I’ll paraphrase how Joi Ito, director of the MIT Media Lab, described the issue at a recent talk: To the corporate leader, downside risk is determined by aggregating variables that are stress-tested through complex analyses in an attempt to account for unknowns. And the potential of digital is full of unknowns, so it can easily be discounted down to where it is assumed to just have incremental impact.

But here’s a whole different view: To a venture capitalist, the maximum downside is the loss of 100% of his or her investment. That investment is meted out in small chunks as milestones are passed, so exposure is clear, measurable and contained. And the upside is viewed as exponential (though low-odds).

Food for thought: Reframing the risk/reward inputs and calculation can be a liberating and responsible course of action.

Digital transformation is a non-starter without the right talent. Seek evidence beyond the skills that seem urgent now but come with an expiration date — what matters is hybrid thinking, continuous learning and a record of delivering meaningful results. Is “fit” simply a euphemism for “people like me”? Go after your complements, and even some people who don’t fit your mold, but for whom you are committed to make room. The continued homogeneity of the faces on the “Team” section of most corporate and start-up websites in this day and age reinforces the untapped opportunity to invite others in and reap the rewards.

You must measure client outcomes. What gets measured gets done. And the wrong metrics stifle innovation. Applying yesterday’s metrics with blunt force is a death sentence for new ideas. The CEO must take a stand on how to gauge digital progress. Implement metrics that: 1. Align to the strategy. 2. Reveal how well you are delivering outcomes to the client (i.e., fulfilling the benefits that brought them to you in the first place). 3. Focus on how well the team is delivering results to clients. 4. Relate to drivers of the P&L and overall franchise health now and in three to five years.

You need to generate speed and momentum through constant progress in small chunks. It beats all-at-once precision that misses the market. Iterate, iterate, iterate, as fast as you can. Make live prototypes and show them to clients. Test and learn. Be flexible to new data and insight. The word “failure” does not appear in this playbook. “Failure” is something you bring upon your team when you don’t take the learning from a study, a test, a prototype, a client conversation and have it fuel the next improvement, however large or small, to allow you to move closer to success. “Failure” is what happens when the water cooler talk echoes with, “That doesn’t work, so we killed it.” A culture of “failure” has gum in its gears.

You must pursue three stages to finding your digital leverage: Step one: Identify the sources of revenue from new clients or relationship expansion (see above point on speed) and the drivers to win this business. Step two: Define the profit model. Step three: Go for scale. I worked under a CEO who set up this one-sentence approach during our early days of digital transformation: “Find the unit profit model and then see if you can scale it.”

You need to collaborate. Some people are wired to collaborate. Others are expert at advancing their own goals through silos. Evidence of growth effectiveness: an environment where colleagues build on each other’s ideas with the goal of shared success. Make collaboration a hiring competency that is taken seriously. Make it an expectation and demonstrate through your own behavior what that means.

Finally, you must get out there and get your hands dirty. We all learn by doing. Fast and valuable knowledge exchange takes place when corporates and start-ups interact. Corporates will find the speed, iteration and absence of failure as a concept inspiring. Start-ups are always looking for mentors and advisers with financial, marketing and operating experience. This quid pro quo can be the basis for a mutually beneficial and mind-expanding relationship. Make the meeting ground any space that is not a corporate conference room.

This post is also published in Amy’s regular column on Huffington Post.

2015 ROI Survey on Customer Experience

Six years ago, we launched the Customer Experience ROI Study in response to a sad but true reality: Many business leaders pay lip service to the concept of customer experience – publicly affirming its importance, but privately skeptical of its value.

We wondered… how could one illustrate the influence of a great customer experience, in a language that every business leader could understand and appreciate?

And so the Customer Experience ROI Study was born, depicting the impact of good and bad customer experiences, using the universal business “language” of stock market value.

It’s become one of the most widely cited analyses of its kind and has proven to be an effective tool for opening people’s eyes to the competitive advantage accorded by a great customer experience.

This year’s study provides the strongest support yet for why every company – public or private, large or small – should make differentiating their customer experience a top priority.

Thank you for the interest in our study. I wish you the best as you work to turn more of your customers into raving fans.

THE CHALLENGE

What’s a great, differentiated customer experience really worth to a company?

It’s a question that seems to vex lots of executives, many of whom publicly tout their commitment to the customer, but then are reluctant to invest in customer experience improvements.

As a result, companies continue to subject their customers to complicated sales processes, cluttered websites, dizzying 800-line menus, long wait times, incompetent service, unintelligible correspondence and products that are just plain difficult to use.

To help business leaders understand the overarching influence of a great customer experience (as well as a poor one), we sought to elevate the dialogue.

That meant getting executives to focus, at least for a moment, not on the cost/benefit of specific customer experience initiatives but, rather, on the macro impact of an effective customer experience strategy.

We accomplished this by studying the cumulative total stock returns for two model portfolios – composed of the Top 10 (“Leaders”) and Bottom 10 (“Laggards”) publicly traded companies in Forrester Research’s annual Customer Experience Index rankings.

As the following vividly illustrates, the results of our latest analysis (covering eight years of stock performance) are quite compelling:

THE RESULTS

8-Year Stock Performance of Customer Experience Leaders vs. Laggards vs. S&P 500 (2007-2014)

graph

Comparison is based on performance of equally weighted, annually readjusted stock portfolios of Customer Experience Leaders and Laggards relative to the S&P 500 Index.

Leaders outperformed the broader market, generating a total return that was 35 points higher than the S&P 500 Index.

Laggards trailed far behind, posting a total return that was 45 points lower than that of the broader market.

THE OPPORTUNITY

It’s worth reiterating that this analysis reflects nearly a decade of performance results, spanning an entire economic cycle, from the pre-recession market peak in 2007 to the post-recession recovery that continues today.

It is, quite simply, a striking reminder of how a great customer experience is rewarded over the long term, by customers and investors alike.

The Leaders in this study are enjoying the many benefits accorded by a positive, memorable customer experience:

  • Higher revenues – because of better retention, less price sensitivity, greater wallet share and positive word of mouth.
  •  Lower expenses – because of reduced acquisition costs, fewer complaints and the less intense service requirements of happy, loyal customers.

In contrast, the Laggards’ performance is being weighed down by just the opposite – a poor experience that stokes customer frustration, increases attrition, generates negative word of mouth and drives up operating expenses.

The competitive opportunity implied by this study is compelling, because the reality today is that many sources of competitive differentiation can be fleeting. Product innovations can be mimicked, technology advances can be copied and cost leadership is difficult to achieve let alone sustain.

But a great customer experience, and the internal ecosystem supporting it, can deliver tremendous strategic and economic value to a business, in a way that’s difficult for competitors to replicate.

LEARN FROM THE LEADERS

How do these Customer Experience Leading firms create such positive, memorable impressions on the people they serve? It doesn’t happen by accident. They all embrace some basic tenets when shaping their brand experience – principles that can very likely be applied to your own organization:

  1. They aim for more than customer satisfaction. Satisfied customers defect all the time. And customers who are merely satisfied are far less likely to drive business growth through referrals, repeat purchases and reduced price sensitivity. Maximizing the return on customer experience investments requires shaping interactions that cultivate loyalty, not just satisfaction.
  2. They nail the basics, and then deliver pleasant surprises. To achieve customer experience excellence, these companies execute on the basics exceptionally well, minimizing common customer frustrations and annoyances. They then follow that with a focus on “nice to have” elements and other pleasant surprises that further distinguish the experience.
  3. They understand that great experiences are intentional and emotional. The Leading companies leave nothing to chance. They understand the universe of touchpoints that compose their customer experience, and they manage each of them very intentionally – choreographing the interaction so it not only addresses customers’ rational expectations, but also stirs their emotions in a positive way.
  4. They shape customer impressions through cognitive science. The Leading companies manage both the reality and the perception of their customer experience. They understand how the human mind interprets experiences and forms memories, and they use that knowledge of cognitive science to create more positive and loyalty-enhancing customer impressions.
  5. They recognize the link between the customer and employee experience. Happy, engaged employees help create happy, loyal customers (who, in turn, create more happy, engaged employees!). The value of this virtuous cycle cannot be overstated, and it’s why the most successful companies address both the customer and the employee sides of this equation.

To download a copy of the complete Watermark Consulting 2015 Customer Experience ROI Study, please click here.

Pointers on Managing GRC Issues

MetricStream has shared with us a November 2014 report from the analyst firm Forrester: Predictions 2015: The Governance, Risk and Compliance Market Is Ready For Disruption. (Registration required.)

I have had serious issues in the past with Forrester, its portrayal of governance, risk management and compliance (GRC), its assessment of vendors’ solutions and its advice to organizations considering purchasing software to address their business problems.

However, Forrester does talk to a lot of organizations, both those that buy software as well as those that sell it. So, it is worth our time to read their reports and consider what they have to say. I’m going to work my way through the report, with excerpts and comments as appropriate.

“…the governance, risk, and compliance (GRC) technology market is ripe for disruption.”

I have a problem with the whole notion of a GRC market. For a start, the “G” is silent! The analysts seem to forget that there are processes, each of which can be enabled by technology, to support governance of the organization by the board and others. For example, there is a need to enable the secure, efficient and useful sharing of information with the board – for scheduled meetings and throughout the year. In addition, there are needs to support whistleblower processes, legal case management, investigations, the setting and cascading of business objectives and goals, the monitoring of performance and so many more.

In addition, organizations should not be looking for a GRC solution. They should instead be looking for solutions to meet their more critical business needs. Many organizations are purchasing a bundle of GRC capabilities but only use some of what they have bought – and what they do use may not be the best in the market to address that need.

Finally, I have written before about the need to manage risk to strategies and objectives. Yet, most of these so-called GRC solutions don’t support strategy setting and management. There is no integration of risk and strategy. Executives cannot see, as they review progress against their strategies and objectives, both performance progress and the level of related risks.

“A corporate risk event will lead to losses topping $20 billion.”

What is a “risk event”? This is strange language. Why can’t Forrester just talk about an “event” or, better still, a “situation”?

I agree that management of organizations continue to make mistakes – as they have ever since Adam and Eve ate the apple. Some mistakes result in compliance failures, penalties, reputation damage and huge losses. I also agree that the size of those losses continues to rise.

But what about mistakes in assessing the market and customers’ changing needs, bringing new products and services to market or price-setting (consider how TurboTax alienated and lost customers)? I have seen several companies fall from leaders in their market to being sold for spare parts (Solectron and then Maxtor).

Management should consider all potential effects of uncertainty on the achievement of objectives.

“Embed risk best practices across the business…. Risk management helps enhance strategic decision-making at all organizational levels, and, when company success or failure is on the line, formal risk processes are essential.”

The focus on decision-making across the enterprise is absolutely correct. Risk management should not be a separate activity from running the business. Every decision-maker needs to consider risk as she makes a decision, so she can take the right amount of the right risk.

“Read and understand your country’s corporate sentencing guidelines.”

This is another excellent point! Unfortunately, the authors didn’t follow through and point out that the U.S. Federal Sentencing Guidelines require that organizations take a risk-based approach to ensuring compliance; those that do will have reduced penalties should there be a compliance failure.

“Build and maintain a culture of compliance.”

Stating the obvious. It is easy to say, not so easy to accomplish.

“Review risks in your current register and add ‘customer impact’ to the relevant ones.”

All the potential consequences of a risk should be included when analyzing it. Rather than “customer,” I would include the issues that derive from upsetting the customer, such as lost sales and market share.

Further, it’s not a matter of reviewing risks in your risk register. It’s about including all potential consequences every time you make a decision, as well as when you conduct a periodic review of risks. Risk management should be an integral part of how decisions are made and the organization is run – not just when the risk register is reviewed.

Forrester makes some comments and predictions concerning GRC vendors. I don’t know whether they are right or wrong. However, I say again that organizations should not focus on which is the best GRC platform. They should instead look for the best solution to their business needs, whatever it is called.

I do agree with Forrester that there are some excellent tools that can be used for risk monitoring. They should be integrated with the risk management solution, with ways to alert appropriate management when risk levels change.

What do you think of the report, the excerpts and my comments?

Should we continue to talk about GRC platforms? Is it time to evaluate risk management solutions? How about integrated strategy, performance and risk solutions?

[By way of complete disclosure, I have a relationship with a number of vendors of “GRC” solutions, including MetricStream and Resolver. I no longer have a relationship with SAP.]